Selling a Former Home Tax Efficiently.
Did you know that, as a married couple, it is possible for one spouse to pass some of their Capital Gains to the other in order to make the best use of their annual exemptions, losses or lower tax rate?
A good example of this is when selling a former home of one of the parties. For instance, if a wife owns a house which was her home before she married but now wishes to sell it, there are ways in which she can reduce the taxable amount of Capital Gains.
Part of her gain will be covered by PRR (Private Residence Relief) and, if she has been letting the property since moving out, another relief is Letting Exemption for the period that the property was let. However, the chances are that there will be an amount of Capital Gains Tax still to pay.
Should her spouse be in a position where they haven’t used all their annual exemption, the wife can gift a share of the property and therefore take advantage of the unused annual exemption. This will however result in the loss of some of the PPR and Letting Exemption, but an still be signigicantly beneficial.
Of course, these things are never perfectly straightforward and it is important to ask your accountant to play with the figures and work out the most advantageous use of tax exemptions, but the savings can be significant.
If you would like us to work out the best option for you and your spouse, we will be delighted to help. Just call our Lancaster office on 01524 67111 and we will set up an appointment with a member of our specialist team.
Author: Wendy Hird
Wendy’s exceptional knowledge and experience, gained through spending 7 years with HM Revenue and Customs and 21 years with Scott & Wilkinson, makes her one of our most respected taxation specialists. She has worked with many...
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